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Which Domestic Firms Benefit from FDI? Evidence from Selected African Countries
Author(s) -
Boly Amadou,
Coniglio Nicola D.,
Prota Francesco,
Seric Adnan
Publication year - 2015
Publication title -
development policy review
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.671
H-Index - 61
eISSN - 1467-7679
pISSN - 0950-6764
DOI - 10.1111/dpr.12130
Subject(s) - nexus (standard) , multinational corporation , foreign direct investment , absorptive capacity , productivity , business , international economics , export performance , market access , survey data collection , international trade , economics , industrial organization , economic growth , finance , macroeconomics , agriculture , ecology , statistics , mathematics , biology , computer science , embedded system
The existing literature on the effects of FDI inflows on domestic firms' performance offers ambiguous evidence. Macro‐level studies suggest that the characteristics of inward FDI and the ‘absorptive capacity’ of the host economy matter in determining the sign (or the mere existence) of these effects. Studies based on micro‐level data have so far mostly focused on finding a nexus between FDI inflows and the productivity of domestic firms, suggesting that the effects might be highly heterogeneous. This article, using a recent firm‐level survey conducted by UNIDO in 19 sub‐Saharan African countries, explores the channels through which multinational enterprises may exert an impact on local firms: products’ market, input availability and costs, access to finance and export opportunities, and analyses the strategic reactions of domestic firms induced by the presence of foreign affiliates.